GCI REPORTS THIRD QUARTER 2017 FINANCIAL RESULTS
Net Loss of $9 million
Consolidated Revenue of $231 million
Pro Forma EBITDA of $81 million
November 1, 2017, Anchorage, Alaska - General Communication, Inc. ("GCI") (NASDAQ:GNCMA) announces its results for the third quarter of 2017.
Liberty Interactive Transaction Update:
As previously announced, GCI and Liberty Interactive Corporation signed an agreement to combine GCI with certain assets of the Liberty Ventures Group. The following summarizes our progress on outstanding closing related requirements:
Regulatory Approvals: As previously reported, we have made the required filings with each of the Federal Communications Commission ("FCC") and the Regulatory Commission of Alaska seeking approval of the transaction.
Shareholder vote: We are responding to additional requests from the SEC on the S-4.
We are now expecting to close the transaction in the first quarter of 2018 rather than the fourth quarter of 2017, subject to the satisfaction of customary closing conditions, including the regulatory and shareholder approvals.
Operating and Financial Highlights
Our third quarter revenues were $231 million, an increase of $7 million sequentially and a $5 million decrease from the third quarter of 2016. The year-over-year decline was due largely to a $5 million decline in wireless equipment revenue. Pro Forma EBITDA, which is Adjusted EBITDA plus $2 million of one-time Liberty transaction costs in the quarter, was $81 million. This is up $6 million from the previous quarter and $3 million year-over-year.
As we have stated previously, we are focusing on operating efficiencies and cost savings as we expect muted revenue growth in the context of the Alaska recession. This quarter we had Pro Forma EBITDA margins of 34.9 percent compared to 33.0 percent in the third quarter of 2016 and 33.4 percent in the second quarter of 2017.
Consumer revenues of $110 million in the third quarter were up $4 million or 3.5 percent sequentially and down $5 million or 4.1 percent year-over-year. Wireless revenues were down $5 million year-over-year with the declines primarily from handset sales. During the quarter we experienced subscriber declines of 1,900 cable modems, 2,300 video subscribers and 300 wireless subscribers. The recession in Alaska is a significant contributing factor in our subscriber headwinds. However, we also completed our rate plan simplification project effective September 30, 2017. This was an important project to complete as we move to our new billing system in 2018 although it did result in elevated customer churn throughout the process.
GCI Business revenues of $121 million in the third quarter were up $3 million or 2.6 percent sequentially and down $1 million or 0.6 percent year-over-year. The year-over-year decline is due to declines in voice revenues. On a sequential basis, second quarter revenue was affected by a $5 million reduction from the Universal Services Rural Health Care adjustment. Excluding this adjustment, third quarter sequential revenues would have declined $2 million due to lower time and materials revenue.
SG&A expenses were $91 million during the quarter. Excluding the one-time Liberty transaction costs of $2 million, expenses were level year-over-year and up $2 million or 2.0 percent sequentially.
On a year to date basis we have made $120 million of capital expenditures excluding capitalized interest.
After adding back the roaming adjustment and Liberty transaction costs, our net debt to trailing 12 months Adjusted EBITDA was 4.6x as of September 30, 2017.
We are affirming our Pro Forma EBITDA guidance to be between $300 million and $315 million in 2017, excluding costs related to the Liberty transaction.
Capital expenditures are expected to be approximately $165 million in 2017.
Use of Non-GAAP Measure
Pro-Forma and Adjusted EBITDA are presented herein and are non-GAAP measures. See our attached financials for a reconciliation of these non-GAAP measures to the nearest GAAP measure.
Pro-Forma EBITDA guidance is a forward-looking non-GAAP financial measure presented herein. Reconciliation to the most directly comparable GAAP financial measure is not provided because we are unable to provide such reconciliation without unreasonable effort. The inability to provide a reconciliation is due to the uncertainty and inherent difficulty regarding the occurrence, the financial impact and the periods with respect to recognition of future GAAP financial measures. We also believe that such a reconciliation would imply an inappropriate degree of precision. For the same reasons, we are unable to address the probable significance of the unavailable information.
The company will hold a conference call to discuss the financial results on Thursday, November 2, at 2:00 p.m. (Eastern). To access the call, call the conference operator between 1:45-2:00 p.m. (Eastern) at 844-850-0551 (International callers should dial +1-412-902-4197) and identify your call as "GCI".
In addition to dial-up access, GCI will make available net conferencing. To access the call via net conference, log on to ir.gci.com and follow the instructions.
After appropriate filings have been made with the SEC, a rebroadcast of the briefing will be available by logging onto our investor relations site at www.gci.com.
Forward-Looking Statement Disclosure
The foregoing contains forward-looking statements regarding GCI's expected results that are based on management's expectations as well as on a number of assumptions concerning future events. Actual results might differ materially from those projected in the forward-looking statements due to uncertainties and other factors, many of which are outside GCI's control. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in GCI's cautionary statement sections of Forms 10-K and 10-Q filed with the Securities and Exchange Commission.
GCI is the largest communications provider in Alaska, providing data, wireless, video, voice and managed services to consumer and business customers throughout Alaska and nationwide. Headquartered in Alaska, GCI has delivered services for nearly 40 years to some of the most remote communities and in some of the most challenging conditions in North America. Learn more about GCI at www.gci.com.
Media / Investors: Heather Handyside, 907.868.6838, firstname.lastname@example.org
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Press Release Financials 9-30-2017